Conflict avoidance / accounting Flashcards
What is a balance sheet?
A statement of the business’s financial position showing its assets and liability at a given date, usually at the end of a financial year
Also called a statement of financial position
What assets can be included on a balance sheet?
Cash, property, debtors and other investments
What liabilities can be included on a balance sheet?
Borrowings, overdrafts, loans and creditors
What is a profit and loss account?
A summary of the business’s income and expenditure transactions, prepared usually on an annual basis
Also called an income statement
What are ‘management accounts’ prepared for?
Internal use by a business and are not audited
Who prepares ‘audited accounts’?
A Chartered Accountant
What does a cashflow statement show?
All the actual receipts and expenditure to include VAT
What is IFRS 16?
The lease accounting standard with which all companies have to comply when using the International Financial Reporting Standards in respect of reporting property liabilities
The full cost of leases has to be accounted for on the balance sheet
In relation to rent payments, what counts as a liability?
An occupier’s obligation to pay rent has to be recognised as a liability, though service charge payments would be accounted for separately
In relation to leases, do they have to be accounted for on a balance sheet?
Yes.
The full cost of leases has to be accounted for on the balance sheet.
Why do leases need to be included in financial reporting?
Because an occupier’s obligation to pay rent has to be recognised as a liability, though SC payments would be accounted for separately
Leases 12 months or shorter are exempt
What is auditing?
Term used to describe the examination and verification of a company’s financial accounts.
Why do leases need to be included in financial reporting?
Because an occupier’s obligation to pay rent has to be recognised as a liability, though SC payments would be accounted for separately
Leases 12 months or shorter are exempt
What methods should you consider as part of conflict avoidance?
- Clear, concise drafting of the contract, lease or associated documentation
- Risk analysis: understand what could go wrong or how misinterpretation might arise
- Manage expectations and understand client objectives
- Negotiate contractual obligations carefully
- Keep good records with sufficient detail
What is conflict management?
Involves the use of processes, tools and skills to find ways to manage disagreements and disputes
What is dispute resolution?
The resolution of a dispute between two or more parties
What factors might you consider when choosing a form of dispute resolution?
- Cost
- Access
- Confidentiality
- Speed
What is the most basic form of dispute resolution?
Negotiation
Where the parties themselves negotiate a resolution.
What is arbitration?
The formal legal process that uses the civil legal system to resolve a dispute that adopts a set of rules
What is ADR?
Alternative Dispute Resolution
Dispute resolution processes that fall outside the scope of court litigation
Contracts might have a dispute resolution clause
What are the benefits of ADR?
- Speed: taking less time that court proceedings
- Informality: Outside a court
- Cost: less money on prof fees for litigation
- Greater opportunity for negotiation
- Quality of decision making, as the outcome can be decided by a surveyor rather than a judge
- Confidentiality
What happens in Arbitration?
An arbitrator decides a dispute acting in accordance with statute (e.g. Arbitration Act 1996)
An awards is produced that binds both parties
Arbitrator will have specialist knowledge of the subject area
How are proceedings dealt with in Arbitration?
Via written representations, but the arbitrator has the power to order a hearing
Arbitrators have the power to award costs
Arbitrators cannot be sued for negligence but there are ground for appeal
What are the benefits of Arbitration?
Fast, cost effective and confidential
What is an Independent Expert Examination?
Appointed by the agreement of the parties and produces a determination that binds the parties
Will have specialist knowledge and if appointed by RICS DRS will be highly trained
Will make their own investigations and use knowledge / experience to reach a decision, but might invite written representations from the parties
Costs determined by contract
Can be sued for negligence but very hard to overturn a determination
What are the benefits of Independent Expert determination?
Fast, cost effective and confidential
What is PACT?
Professional Arbitration on Court Terms
A form of ADR specific to business tenancy renewals under the L&T Act 1954
Via the County Court but only available if both parties agree
Joint initiative between RICS and the Law Society for determination of disputed rent and/or non-rent terms by a property specialist
When can PACT be used?
Before or after formal lease renewal court proceedings have been issued
What role does the dispute resolver take on in PACT?
They can act as an arbitrator or as an independent expert, as agreed between the parties
What is Mediation?
Involves the use of a neutral mediator who facilitates discussions between the two parties to explore whether a solution can be found
What are the benefits of Mediation?
Informal and confidential
On what basis is Mediation conducted on?
A ‘without prejudice’ basis
The mediator has no decision-making authority and cannot impose a resolution on the parties
Name a few of the ADR services in the RICS Dispute Resolution Service.
- Arbitration
- Independent expert determination
- PACT (professional arbitration on court terms)
- Ground rent assessment
- Neighbour disputes service
How must an expert witness act?
Must be independent and unbiased
Act within their expertise, experience and knowledge
Truthful
Not exaggerated
Recognise alternative views
What is the difference between an independent expert and an expert witness?
An independent expert is a dispute resolver who decides a dispute.
An expert witness is appointed to present evidence to a dispute resolver.
What is an advocate? ADR.
A surveyor can represent a client in the role of advocate in front of tribunals
Owes a duty to their client and also the tribunal to act properly and fairly
Professional Statement and Guidance note to support this (2017)
When does the RICS get involved in a complaint?
When a member doesn’t respond
